If anyone would answer this question that would be great. What is the difference between an assignment and a lease? I received an offer of an assignment rather than a lease. The assignment appears to essentially be the sale of my interest in its current form. It exempts all other lease burdens. It has a 3-year term. I retain an ORRI. When I search for oil and gas assignments in this sec twp rng I find no other owners accepting this kind of offer. The assignments I have seen are transfers to a family trust or between oil companies/operators.
It sounds like they think you own part of a currently existing lease or leases. It sounds like a term assignment for 3 years. I’m assuming there’s language in there along the lines of “…For a primary term of 3 years and so long thereafter as there is production…?” It means if you sign it, any interest you own in the lease is now owned by this company for the next three years and reverts back to you if there is no production at the end of the primary term. If there is production, they keep the interest until production ends. You keep an Overriding Royalty Interest, which is a burden on whoever purchases this interest from you. Is there a reference to a currently existing lease in the document, or just a legal description? Depending on the language of the document, production can include new production and continued production from any currently existing wells.
In regards to your actual question, an Oil, Gas and Mineral Lease is a document Mineral Interest owners, aka landowners, sign. This document gives the Lessee (the person who paid for the lease) the right to drill on the property, and in return for that right, they get to keep a larger portion of the profit from the sale of any oil, gas and minerals produced from the property while paying a small royalty to the landowners. The Lessee will have to pay something called a bonus when they take the lease, which is the dollar amount per acre agreed upon by the parties when the lease is executed.
An Assignment of an Oil, Gas and Mineral Lease is a document in which the original Lessee, and or their successors, assign either all or part of their working interest and/or net revenue interest that they own in that lease. This is leasehold interest. You can also assign or reserve interest in wellbores. An Overriding Royalty Interest is an interest given out on a currently existing lease that will burden the leasehold interest owner who gave it, and that owner’s successors. ORRI does not effect the mineral interest, just the leasehold.
I’d have to see the document they sent you to tell you for sure what they want, but the ORRI indicates to me that they think you own working interest.